REAL ESTATE

High-end home sellers lower their sights

The housing slump is finally bringing down prices in the luxury property market.

Some agents, fearing they won't get the listing, will go with the higher price the client wants, Gardner said. In this case, he recommends the agent include a caveat: "I'll list it at your price, but if we don't have any offers in 30 days I'll be asking for a price reduction."

These types of sellers, he said, "want to test the water."

But this is a trickier proposition in a market in which values are falling, said Darryl Davis, a real estate agent in Wading River, N.Y., who trains agents across the nation. "You need to price ahead of the market instead of lowering the price every 30 days," he said.

It's one thing for an agent to take an overpriced listing when prices are rising. "It's possible the market will catch up with the price eventually," Davis said. "But the reverse is happening. To take an overpriced listing now is pointless for the agent and the homeowner."

Jack Cotton Jr., who specializes in the Cape Cod luxury market at Sotheby's International Realty in Osterville, Maine, says no to sellers who won't price realistically. He turned down the listing of an 11-acre property overlooking the water that the seller wanted to price at $4 million.

"Now it's bank-owned and it's still not selling," Cotton said. The current asking price is $1.8 million.

This is not to say that homes with stratospheric asking prices don't eventually sell after they've had time to come down to earth. A newly built home on more than two acres in Malibu's Paradise Cove area sold last year for $17.5 million -- 56% off its original $39.5-million asking price less than a year earlier. Terra Bella, an Italianate home of nearly 14,000 square feet on three oceanfront acres in Santa Barbara's Hope Ranch, sold in the fall after first coming on the market at $39.5 million in May 2007. Based on transfer tax information from the Santa Barbara county clerk's office, the property sold in October for $12.8 million, more than 67% off the original asking price.

Last year there were 332 sales of homes for $5 million or more statewide, according to MDA DataQuick, a dramatic drop from 608 such sales in 2008 and 565 in 2007.

More so perhaps than in other parts of the nation, Southland sellers have another reason for overpricing at the onset: the magical belief that a star will happen upon their place and be willing to pay any price.

"The story of celebrities knocking on doors and overpaying for a house they 'have to have' still floats around," Malibu agent Gardner said.

Reinforcing the popular myth, Cotton said, is that "every once in a while the real estate god looks down and someone will buy a place that's overpriced."